Diversifying Mineral Supply Chains to Reduce China’s Dominance: The Mineral Security Partnership
The Mineral Security Partnership, a US-led group of 12 countries plus the EU, aims to reduce China’s overwhelming control in producing critical minerals that are necessary for green technologies. In response, the partnership plans to select large-scale critical mineral projects later this year for development, in a bid to lessen China’s influence on these raw materials’ supply chains. The United States convened the partnership in June 2020, and Jose Fernandez, US undersecretary for economic growth, energy, and the environment, shared after visiting Sweden, Norway, Finland, France, and the United Kingdom that the partnership created a shortlist of about 15 projects from about 200 options.
These projects involve mining, processing, and recycling of critical minerals and are geographically diverse, spread across Africa, Asia, Europe, and Latin America. According to Fernandez, China’s control over the critical mineral supply chain is a vulnerability for other countries. As the demand for minerals such as lithium for batteries increases to reduce energy dependency and greenhouse gas emissions, the dominance won’t bode well for the rest of the world. Nonetheless, Fernandez clarified that the partnership’s objective is to diversify, not monopolize, the supply chain by collaborating with producing countries.
There is an urgent need to extract metals such as lithium, cobalt, and manganese as they are essential components of electric cars and renewable energy. An export of the Organization for Economic Cooperation and Development (OECD) reveals China’s significant role in expanding export restrictions on these minerals, claiming that the country has increased restrictions by a factor of nine in 11 years. China processes 50 to 70% of lithium and cobalt and nearly 90% of rare earth elements, according to a report by the International Energy Agency (IEA) released earlier this year. Chinese firms have invested substantially in Indonesia, Australia, Chile, and the Democratic Republic of the Congo, according to the same report.
The Partnership’s Goals
The Mineral Security Partnership aims to address supply chain vulnerabilities by establishing high environmental, social, and governance standards, prioritizing issues such as environmental damages and child labor in the extractive sector. The partnership seeks to achieve these goals by testing an alternative approach that implies the highest environmental standards and maximum engagement with communities.
Meanwhile, the projects that the partnership will take on include mining, processing, and recycling of critical minerals. Fernandez clarified that none of the selected projects involved deep-sea mining, despite the growing interest of some countries in extracting battery metals from the ocean floor. In Norway, the government plans to open up a significant area of the ocean to deep-sea mining; however, the US is taking a “precautionary” approach until more studies on the effects are done.
The partnership’s members include Australia, Canada, EU, France, Germany, Japan, Korea, and the UK. Other countries that joined the partnership sought to address real concerns about being “weaponized” by minerals, Fernandez emphasized. The attempt is not to shut anyone out of the mineral extractive sector, but to collaborate with others who have better social, environmental, and governance standards.
An Additional Piece
The Mineral Security Partnership aims to address a critical vulnerability in green technologies’ critical minerals’ production that the world is currently facing. With the expanding demand for electric cars and renewable energy, lithium, cobalt, manganese, and other essential minerals for green technology have become a strategic commodity. The world’s rising dependence on critical minerals’ supply from China’s unique offering revolves around the country’s vast reserves and the industry’s low-costing labor force and low environmental regulations.
China’s dominance over the critical mineral supply chain raises apparent risks that the partnership aims to address, such as concentration risk and geopolitical tensions. Concentration risk refers to the possibility of supply disruption, particularly if there are geopolitical tensions among countries dependent on China’s supply chain. The partnership’s work aims to create a more diversified supply chain by collaborating with mineral-producing countries that have better environmental, social, and governance standards.
For instance, Chile is the world’s largest supplier of lithium, which is essential for battery components. The country accounts for more than 50% of the world’s lithium production, followed by Australia and Argentina. Lithium raw materials in Chile are almost entirely produced from brines in the salt flats located in the world’s driest desert. Potential environmental risks associated with lithium production are water consumption and the impact on the area’s ecosystems. On the other hand, though, the country has a commitment to reduce greenhouse gas emissions with the government’s goal of achieving carbon neutrality by 2050.
Another example of the partnership’s goal is a tilting shift toward the recovery and recycling of critical minerals that have already been extracted rather than relying on mining new ore. The environmental benefits of recycling metals include reducing the pressure on mining virgin ores, reducing greenhouse gas emissions, and conserving natural resources. For instance, cobalt, one of the critical minerals for electric vehicle batteries, has the potential to be recovered from used batteries. In the US, recycling efforts for batteries through the Department of Energy’s “ReCell” program have shown that recycling used batteries could recover up to 90% of valuable minerals, including lithium, cobalt, and nickel.
Summary
The Mineral Security Partnership aims to diversify the critical mineral supply chain to reduce China’s dominant role in producing raw materials essential for green technologies. The partnership plans to select large-scale critical mineral projects for development spread geographically across Africa, Asia, Europe, and Latin America. According to Fernandez, the dominance of China over the critical mineral supply chain is a vulnerability for other countries. The partnership seeks to address this vulnerability by testing an alternative approach that implies the highest environmental, social, and governance standards, collaborating with mineral-producing countries that have better standards. The partnership’s goals include addressing supply chain vulnerabilities by improving environmental, social, and governance standards and prioritizing issues such as environmental damages and child labor in the extractive sector. As countries transition to reduce energy dependency and greenhouse gas emissions, the partnership’s work becomes increasingly critical in securing critical minerals’ supply.
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A US-led group of 12 countries, plus the EU, plans to select large critical mineral projects for development later this year in a bid to reduce China’s dominant role in producing raw materials needed for technologies greens.
The Mineral Security Partnership, convened by the United States last June, produced a shortlist of about 15 projects chosen from about 200 options, said Jose Fernandez, US undersecretary for economic growth, energy and the environment, after visiting Sweden, Norway, Finland, France and the United Kingdom
“It’s our strong hope that, by the end of the year, we’ll have a couple of big projects that will be announced,” he said. The shortlist includes the mining, processing and recycling of critical minerals, and the projects are geographically diverse. They include some in Africa, “a couple” in Europe, some in Latin America and others in Asia.
China’s control over the supply chain of critical minerals was a “vulnerability” for other countries, Fernandez said. This would become more evident as demand for minerals such as lithium, used in batteries, increases as countries seek to reduce energy dependency and reduce greenhouse gas emissions, she added.
“If we are successful [with the projects]so we’re going to start making a dent and moving the needle on what’s now a vulnerability,” he said.
Fernandez said the partnership was “not about shutting anyone out.”
“It’s not about monopolizing supplies. It’s all about diversifying our supply chains,” she added.
A relationship of the International Energy Agency in 2021 found that China processes 50 to 70% of lithium and cobalt and nearly 90% of rare earth elements. Chinese firms have made substantial investments in Australia, Chile, the Democratic Republic of the Congo and Indonesia, the IEA noted.
In April Jake Sullivan, the US National Security Advisor, said clean energy supply chains are at risk of being “armed” the way oil was in the 1970s or gas since Russia invaded Ukraine.
Fernandez said the reason some countries joined the partnership is because they had already been “weaponized” by minerals. Partnership members include Australia, Japan, UK, Germany, France, Korea, Canada and the EU.
A rexport of the OECD said China is at the forefront of expanding export restrictions on critical minerals. Beijing has increased the number of restrictions on critical raw materials needed for electric cars and renewable energy, such as lithium, cobalt and manganese, by a factor of nine in the 11 years to 2020, the research said.
Fernandez said the minerals partnership has focused on higher environmental, social and governance standards, amid concerns over issues such as child labor and environmental damage in the mining sector.
“The wager is that if, given an alternative that implies the highest environmental principles, maximum engagement with communities, that does not lead countries to choose between economic growth and environmental degradation, then, given this choice, producing countries will choose to work with our partners. We are testing it right now.
None of the selected projects involved deep-sea mining, despite the growing interest of some countries in extracting battery metals from the ocean floor.
This includes Norway, where the government is located make plans to open up a large area of the ocean to deep-sea mining. Fernandez said he briefly discussed deep-sea mining with politicians in Oslo during his visit there, but the US was taking a “precautionary” approach until more studies on the effects were done.
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